Mahindra inks deal to invest INR 203.5 crores in Meru Cabs

Mahindra and Mahindra, one of India’s largest Utility Vehicle manufacturer, has invested INR 201.5 crore in Meru Cabs. This investment gives Mahindra controlling 55% equity stake in the radio taxi service provider initially with a provision to further increase it to 100%. The first round of investment (INR 103.5 crores) will be completed by end-October 2019.

Meru Cabs was founded by Mr. Neeraj Gupta in April 2007 and currently operates in 24 cities. The service utilises over 20,000 cabs and is favoured by over 12 million riders. Facing heat from taxi aggregator services like Uber and Ola, Meru in 2017 started offering hatchbacks, sedans as well as SUVs apart from its traditional green cabs. As of April 2018, Meru turned its focus to corporate clients by increase providing customised taxi solutions.

In a filing to Bombay Stock Exchange, Mahindra and Mahindra said, “Mahindra is keen to grow its presence in the shared mobility space and by acquisition of stake in Meru, the company will enter in the corporate shared mobility space which is an area of strategic interest to the company.”

This is not the first time that Mahindra is venturing into the service sector. The Pune based manufacturer invested INR 176 crores in Zoomcar India to gain a 16% stake. Mahindra’s passenger vehicle business experienced a drop of 25%, falling to 36,085 units in August 2019 as against the same month last year. Tractor sales dropped by 17% to 14,817 units during the same time period. Both pf these numbers include domestic as well as export numbers.

Meru Cabs saw its consolidated revenue dropped from INR 277 crores in FY 2016-17 to INR 190 crores in FY 2017-18 and INR 156.6 crores in FY 2018-19.

Earlier this year in March 2019, Hyundai and Kia invested INR 2,000 crores in Ola. The three parties decided to collaborate to develop unique fleet and mobility solutions. These include India-specific electric vehicle and infrastructure.